1002 Gemini Interests LLC

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
)
IN RE 	)
)
1002 GEMINI INTERESTS, LLC, 	) 	CASE NO. 11-38815-H3-11
)
Debtor, 	)
)
MEMORANDUM OPINION
The court has held an evidentiary hearing on the "First
Interim Application of Adams and Reese, LLP for Compensation and
Reimbursement of Expenses Incurred as Counsel for the Examiner"
(Docket No. 138). 	The following are the Findings of Fact and
Conclusions of Law of the court. 	A separate Judgment will be
entered granting the instant application in part. 	To the extent
any of the Findings of Fact are considered Conclusions of Law,
they are adopted as such. 	To the extent any of the Conclusions
of Law are considered Findings of Fact, they are adopted as such.
Findings of Fact
On October 17, 2011, 1002 Gemini Interests, Inc.
("Debtor") filed a voluntary petition under Chapter 11 of the
Bankruptcy Code.
On November 17, 2011, Unlimited Restoration Specialist,
Inc. ("URI") filed a motion to appoint a trustee in the instant
case, asserting that Debtor had transferred funds to accounts in
ENTERED
06/13/2013
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Nigeria, and to Debtor's principal, Edward I. Nwokedi. 	(Docket
No. 32).
On February 2, 2012, with the agreement of the parties,
the court directed the appointment of an examiner. 	The order
directing appointment of an examiner defined the examiner's
duties:
1. 	Collection of rents from 1002 Gemini;
2. 	Controlling all debtor in possession bank accounts
by becoming the sole signatory on those accounts and
assuring that all funds of 1002 Gemini are deposited in
one of the debtor in possession bank accounts;
3. 	Paying all bills and expenses of 1002 Gemini in
accordance with the present cash collateral order
[Docket No. 33]; and [sic]
4. 	Performing all accounting functions for 1002
Gemini, including, but not limited to, the preparation
and filing of all Monthly Operating Reports and Tax
Returns when due;
5. 	Perform those duties as set forth in
11 U.S.C. § 1106(b), including, but not limited to
filing a report or reports with this Court.
(Docket No. 58).
On April 2, 2012, on motion of the examiner, the court
entered an amended agreed order. 	The amended order did not
change the scope of the examiner's duties, but authorized the
examiner to employ professionals. 	(Docket No. 72).
On April 11, 2012, Edward I. Nwokedi filed a voluntary
petition under Chapter 11 of the Bankruptcy Code, in Case No. 12-
32759-H1-11.
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In the instant application, Adams and Reese, LLP,
("Applicant") seeks allowance of $74,524.00 in fees, and $569.53
in expenses, for representation of the examiner during the period
from May 9, 2012 through November 30, 2012.
The examiner sought and obtained authority to employ
Applicant. 	Susan Mathews was the lead attorney, until March 22,
2013, when she joined another firm.
Applicant groups its services into seven categories.
The first category, "Business Operations," consists of services
in assisting the examiner with preparation of monthly operating
reports, interim status reports, and reviewing Debtor's
operations with Debtor's counsel and Nwokedi. 	These services
were reasonable, necessary to the administration of the case, and
within the scope of the examiner's duties.
The second category, "Employment Applications,"
consists of services in preparing the firm's application to be
employed, filing an amended affidavit, and preparing for and
attending hearings relative to the firm's application. 	The time
records in this category reflect that Applicant expended 16.9
hours on this task, for which it seeks allowance of $5,861.50 in
fees. 	The court has reviewed the application to be employed, as
well as the affidavit. 	The time spent was not reasonable. 	The
court finds that a reasonable time in this category is 10 hours
at Ms. Mathews' rate of $385, for a total of $3,850.
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The third category, "Fee Applications," consists of
services in reviewing and filing fee applications for the
examiner and the examiner's accountant. 	These services were
reasonable, necessary to the administration of the case, and
within the scope of the examiner's duties.
The fourth category, "Case Background/Monitoring
Status," consists of services in reviewing and analyzing the
Debtor's schedules, statement of financial affairs, and claims,
as well as Debtor's motion to convert.
Susan Mathews testified that the time was necessary to
become familiar with the facts of the case. 	The court finds that
the services in this category were reasonable, necessary to the
administration of the case, and within the scope of the
examiner's duties.
The fifth category, "Investigation, etc.," includes
services to review documents produced by Debtor, Nwokedi, and
URI, meet with Nwokedi, the Trustee in Nwokedi's Chapter 11 case,
and creditors, and prepare status reports. 	The services in this
category were reasonable, necessary to the administration of the
case, and within the scope of the examiner's duties.
The sixth category, "Discovery," includes services
rendered in obtaining discovery from Nwokedi. 	Mathews testified
that the examiner had difficulty in obtaining Debtor's records
from Nwokedi and from Debtor's counsel. 	The court finds that the
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1The court notes that the time records reflect a significant
duplication of effort between Susan Mathews and Sherry Goodell.
The time has been allowed at Mathews' higher rate.
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services in this category were reasonable, necessary to the
administration of the case, and within the scope of the
examiner's duties.
The seventh category, "Nwokedi Bankruptcy," consists of
services reviewing the schedules and statement of financial
affairs filed in Nwokedi's Chapter 11 case, attending the meeting
of creditors in Nwokedi's Chapter 11 case, filing a proof of
claim in Nwokedi's case, and correspondence relating to the case
with Nwokedi's counsel and the trustee in Nwokedi's case, for
which it seeks allowance of $8,254.00 in fees.
Mathews' testimony supporting this category of services
is that the two cases were intertwined. 	No other evidence
supports the necessity for these services. 	The court finds that
the only service in this category which were necessary to the
administration of this case, beneficial to the bankruptcy estate
in this case, and within the scope of the examiner's duties, was
the preparation of a proof of claim. 	The court finds that a
reasonable fee for this service is $3,234. 1
Conclusions of Law
Section 330 of the Bankruptcy Code governs the
compensation of professionals, 	That section provides in
pertinent part:
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(3) In determining the amount of reasonable
compensation to be awarded to an examiner, trustee
under chapter 11, or professional person, the court
shall consider the nature, the extent, and the value of
such services, taking into account all relevant
factors, including -
(A) the time spent on such services;
(B) the rates charged for such services;
(C) whether the services were necessary to the
administration of, or beneficial at the time at
which the service was rendered toward the
completion of, a case under this title;
(D) whether the services were performed within a
reasonable amount of time commensurate with the
complexity, importance, and nature of the problem,
issue, or task addressed;
(E) with respect to a professional person, whether
the person is board certified or otherwise has
demonstrated skill and experience in the
bankruptcy field; and
(F) whether the compensation is reasonable based
on the customary compensation charged by
comparably skilled practitioners in cases other
than cases under this title.
(4)(A) Except as provided in subparagraph (B), the
court shall not allow compensation for -
(i) unnecessary duplication of services; or
(ii) services that were not -
(I) reasonably likely to benefit the debtor's
estate; or
(II) necessary to the administration of the
case.
11 U.S.C. § 330.
In the instant case, Applicant has not shown that the
services provided in monitoring Nwokedi's Chapter 11 case were of
any benefit to this estate or the administration of this case.
The amount sought for services in seeking employment of the firm
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is unreasonable. 	The remainder of the services are compensable
under Section 330 of the Bankruptcy Code, on an interim basis
pursuant to Section 331 of the Bankruptcy Code. 	The court
concludes that the application should be granted in part, with
allowed interim fees of $67,492.50, and expenses of $569.53.
Based on the foregoing, a separate Judgment will be
entered allowing interim fees of $67,492.50, and expenses of
$569.53.
Signed at Houston, Texas on June 13, 2013.
LETITIA Z. PAUL
UNITED STATES BANKRUPTCY JUDGE
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